In the words of NABARD, “internal savings mobilized by its members is the core of the SHG”. Banks size their loans to SHGs as a multiple of the savings accumulated. Strangely though, it is not routine for banks to verify SHG balance sheets before lending. Few SHGs try to balance their books, and even fewer have provisions for audits.
In the SHG-bank linkage model, the size of bank loans is determined by the size of the SHG corpus, more than by any other single factor. As a result, SHGs face very strong systemic incentives to neglect errors that overstate their collective savings or understate losses.
Digital Governance: Is Krishna a Glimpse of the Future?
The state of Andhra Pradesh is recognized as a leader in using technology to improve the delivery of public services, programs and subsidies. Many of its innovations were piloted in Krishna District, which has been visited by development agencies and delegations from many countries.